U.S. stocks mostly down as investors digest earnings

The Federal Reserve's latest take on the U.S. economy put many investors into sell mode Tuesday, sending stocks mostly lower after a brief upward turn early in the day.

Fed Chair Janet Yellen testified before the Senate Banking Committee, but the Fed also issued a report noting that valuations for stocks in some sectors, such as social media and biotech firms, appear to be stretched, sending shares in Facebook, Twitter, and LinkedIn lower.

By suggesting some stocks could be overvalued, the Fed is adding to a growing belief among some market-watchers that stocks are due for a pullback, said Drew Wilson, an equity analyst at Fenimore Asset Management.

"In this type of environment when you have a lot of uncertainty, essentially you have this equilibrium that's looking to be broken one way or another, and the Fed chair saying 'financial bubble' could do that," Wilson said.

Investors had plenty more to consider, including a mostly encouraging batch of corporate earnings and economic data.

The major U.S. financial-market indexes were up slightly in premarket trading as JPMorgan, Goldman Sachs, and Johnson & Johnson released quarterly results that exceeded Wall Street's expectations.

Separate reports on U.S. retail sales and manufacturing growth also gave the market an early lift.

But stock indexes diverged shortly after the market opened and then fully veered into the red about an hour into regular trading as investors began to tune into Yellen delivering the central bank's semiannual economic report to Congress.

Stocks finished the day mixed, with the Dow Jones industrial average eking out a tiny gain on the day.

The Dow added 5.26 points, or 0.03 percent, to 17,060.68. The index is down slightly from its July 3 record of 17,068.65.

The Standard & Poor's 500 index fell 3.82 points, or 0.19 percent, to 1,973.28. The index is down 0.6 percent from its most recent all-time high of 1,985.44 set July 3.

The Nasdaq composite shed 24.03 points, or 0.54 percent, to 4,416.39.

The three stock indexes are all up for the year.

Bond prices barely budged. The yield on the 10-year Treasury note held steady at 2.55 percent.

Beyond the Fed, investors are mostly focused on company earnings this week, including quarterly reports from Bank of America, eBay, and Yum Brands on Wednesday.

Investors hammered companies whose quarterly results were less positive.

Shares in the rent-to-own retailer Aaron's tumbled 9.5 percent after the company cut its profit and revenue outlook for the second quarter, partly citing performance of its core business. The stock shed $3.19 to $30.34.